By Chloe Mari A. Hufana, Reporter
PRESIDENT Ferdinand R. Marcos, Jr. on Monday said he approved the suspension of excise taxes on liquefied petroleum gas (LPG) and kerosene to melt the impact of rising fuel costs on households, while leaving levies on gasoline and diesel unchanged.
The selective suspension is predicted to supply modest relief to household budgets but can have limited effect on transport costs and inflation, that are more sensitive to diesel prices.
“We now have reduced the tax on petroleum products which might be directly utilized in the every day lives of our countrymen under the ability given to us by law… meaning lower costs for cooking and the every day needs of every family,” he told a briefing in Filipino.
Mr. Marcos said the reduction is reminiscent of P3.36 per kilo of LPG or about P37 per tank and P5.60 per liter of kerosene.
LPG prices are currently around P1,000 to P1,600 per tank, while kerosene prices are around P154 to P177.19 per liter.
Republic Act No. 12316, which took effect on April 13, granted the President emergency powers to chop or suspend excise taxes on fuel products.
Mr. Marcos said the Unified Package for Livelihoods, Industry, Food, and Transport (UPLIFT) Committee will still convene on Tuesday morning to make your mind up on the possible reduction or suspension of excise taxes on gasoline and diesel.
“What we are going to do [on April 14] is to be certain… [we have] the provision of oil, food products and all the opposite raw materials [needed to] proceed the running of the economy,” the President said.
The country is under a year-long energy emergency because the Middle East crisis threatens its fuel supply. Mr. Marcos established the UPLIFT Committee, an inter-agency body answerable for managing the federal government’s response to the war’s impact on the economy.
Excise taxes are capped at P6 a liter for diesel and P10 a liter for gasoline and other petroleum products, with a 12% value‑added tax applied broadly to goods and services.
FOOD SUPPLY
Meanwhile, Mr. Marcos said he ordered the Department of Agriculture (DA) and the Tariff Commission to reduce duties on imported food to make them cheaper for Filipino consumers, but he didn’t expound on the precise rates.
“We’ll protect consumers, farmers and the industry. That’s the balance we’re on the lookout for because… the economy is a sophisticated system,” he added.
The DA and native governments are also expected to purchase from local farmers.
“The federal government will catch this, so the harvest isn’t wasted, our farmers don’t lose money, and our consumers profit,” he said, adding the federal government may even expand its flagship Benteng Bigas Program.
The federal government also moved to expedite the processing of permits, similar to the Sanitary and Phytosanitary Import Clearance and the Certificate of Necessity to Import, to reduce costs.
Mr. Marcos also ordered the removal of fees at fish ports.
The Philippine Ports Authority also set the “RoRo” (roll-on, roll-off) terminal fee for vessels carrying agricultural products to P1.
“Our goal is to take care of adequate supply, prevent price increases, and be certain that our countrymen proceed to earn a living,” Mr. Marcos said.
John Paolo R. Rivera, a senior research fellow on the Philippine Institute for Development Studies, said the impact of the excise tax suspension on kerosene and LPG will probably be modest and targeted reasonably than broad-based.
Mr. Rivera said the move can bring immediate relief to households but the general effect on inflation and total household spending will probably be limited.
“Global price movements will still be the dominant driver of local prices. So, it helps on the margin especially for vulnerable households, nevertheless it isn’t enough by itself to significantly offset broader cost-of-living pressures,” he said via Viber.
TAX CREDIT SCHEME
Meanwhile, lawmakers are pushing a tax credit scheme to permit immediate fuel price cuts, difficult the Department of Finance’s (DoF) position that suspending excise taxes may only apply to future imports.
Marikina Rep. Romero Federico “Miro” S. Quimbo, who heads the Committee on Ways and Means, said the federal government should ensure the general public feels the relief “immediately.”
He proposed at a House of Representatives hearing on Monday that fuel corporations be granted tax credits for excise taxes already paid on existing inventories so that they could cut pump prices without waiting for brand new shipments.
He estimated potential reductions of about P10 per liter for gasoline, P6 for diesel and P4.50 for kerosene as early because the day after a presidential directive.
The proposal runs counter to the DoF’s position that applying tax relief to fuel already within the country could be difficult.
“It can be hard with regard to administrative feasibility, the removal of the excise stocks, the inventories which might be here within the Philippines,” Finance Undersecretary Rolando T. Ligon, Jr. told the hearing. The direction they’re is to use it to “upcoming importations.”
Mr. Ligon said implementing tax relief on fuel already in storage poses technical and administrative challenges, citing the complexity of adjusting taxes on existing inventories.
He said once a directive is signed, implementation could take effect inside one to 2 days through issuances from the Bureau of Customs.
Mr. Quimbo also asked the DoF to clarify why a tax credit scheme could be unworkable, noting that the Bureau of Customs maintains records of inventory and tax payments.
Discussions on fuel tax measures come as volatility persists in global oil markets amid tensions linked to the Strait of Hormuz and the US-Israel war on Iran.
Energy Undersecretary Alessandro O. Sales said diesel prices are expected to drop by P20 to P21 per liter on Tuesday attributable to market movements, but warned that conditions remain unstable.
He said prices could climb to P130 to P170 a liter if hostilities resume, while a longer-term resolution could bring diesel prices all the way down to P75 to P90 a liter over several months.
VAT REMOVAL UNLIKELY
Meanwhile, Mr. Marcos rejected calls to chop or suspend value-added tax (VAT) on fuel products, saying revenues from VAT collection are needed to fund aid programs for the general public.
“If we take away the VAT on petroleum products, it can only help the petroleum market. What we want is funding to assist the complete society,” he said.
“Without delay, the cost-benefit evaluation between the VAT collections and the profit to people, odd people, still favors that we collect VAT and we use the additional funds.”
The DoF also expressed reservation regarding proposals to cut back the VAT on fuel to 10% from 12%.
Mr. Ligon said the removal or reduction of the VAT on petroleum products would lead to a revenue loss of roughly P120 billion, further straining the national budget.
Joseph J. Capuno, undersecretary on the Department of Economy, Planning, and Development, said the Executive branch favors targeted subsidies over a uniform reduction in VAT.
“Targeted subsidies reasonably than uniform reduction in taxes that may compromise our ability to boost revenues to support those subsidies,” Mr. Capuno said, noting that broad tax cuts profit all segments of the population reasonably than simply the vulnerable.
In response, Cagayan de Oro Rep. Rufus B. Rodriguez called for a short lived reduction of the VAT to 10% only until the market price of oil drops below $80 per barrel, calling the present situation as a pressing emergency.
Mr. Rodriguez also pushed for a joint session of Congress to enact a “Bayanihan 3” package to handle the energy crisis, much like the one implemented in the course of the coronavirus pandemic. — with Erika Mae P. Sinaking